As Bon-Ton reported it will vacate the Mall at Steamtown in January, department store magnate Al Boscov admits the shopping complex is battling for its existence.

"I am trying to figure out ways that we can survive," said Mr. Boscov, who developed the $101 million Lackawanna Avenue complex and is a principal in the group that owns the facility.

Bon-Ton reported it will close its 100,000-square-foot store in the mall before its lease expires Jan. 31. Spokeswoman Mary Kerr said it probably will cease operations between Jan. 26 and Jan. 29.

"It's sad. It's certainly something that we don't want to do," Ms. Kerr said. "We do have to make these hard decisions at times."

Bon-Ton has been an anchor at the mall since 2000, when it relocated from the Keyser Oak Shopping Center. The company also leases two first-floor inline mall spaces totaling 10,000 square feet, where it sells shoes and clearance items.

The closing will affect about 50 employees at the store, Ms. Kerr said. Some may be hired at the company's store in the Midway Shopping Center in Wyoming and others will be granted severance benefits, she said.

Regardless of Bon-Ton's impending departure, debt issues have dogged the mall for years.

"I've got to find a way to fill it," Mr. Boscov said. "I'm working like hell to make sure the mall can survive."

On Thursday, Mr. Boscov said he has been seeking a replacement for Bon-Ton for about two months.

"We have no one lined up yet," he said. "We are talking to people."

John Topa, director of marketing at the mall, said the space Bon-Ton occupies may be divided to accommodate two tenants.

"We are going to rebound from this," he said. "This isn't our first rodeo."

The critical situation surfaces as the mall approaches the 20th anniversary of its opening on Oct. 23.

Mr. Boscov said his store at the mall is thriving, and downplayed a discussion about the mall's milestone anniversary. He said meetings with potential tenants will probably determine the mall's fate.

"There is no anniversary, as far as I'm concerned," he said.

It may be difficult to overstate the importance of the mall to the city and the health of the downtown business community.

The mall's owners paid more than $912,900 in Lackawanna County, city and school district real estate taxes in 2012, according to Scranton Single Tax Office records. The figures include payments associated with the Samter's and Oppenheim buildings, which are owned by the mall partnership.

The totals do not include payments of mercantile and wage taxes.

Meanwhile, an attorney general's office in the Samter's building will relocate to the former Southern Union Co. headquarters at 417 Lackawanna Ave. by the end of the year. The office includes the Consumer Protection Bureau, Torts Litigation Unit and Child Predator Unit.

Attorney general's office spokesman Joe Peters said the office put out bids for space and visited about half a dozen buildings. The newer facility at 417 Lackawanna Avenue offered the security and technological amenities that the office requires.

The mall reported in 2010 that it employed more than 950 people. Current employment figures were not available, but several hundred still work there.

"It's a place where many downtown employees go to eat, shop, or park," Mayor Chris Doherty said. "They pay their taxes. They are a major employer."

Mr. Doherty said he had not heard from Mr. Boscov about the crisis.

"Our last conversations were that he is working on refinancing," Mr. Doherty said. "We are very hopeful that he will be successful."

The mall suffered occupancy issues for years. The trouble accelerated after the mall's ownership lost a court battle to prevent development of the Shoppes at Montage, a retail center that opened in 2007 in Moosic.

Since then, the mall has lost many national retailers that settled either at the Shoppes at Montage or the Viewmont Mall in Dickson City. The list includes Gap, Eddie Bauer, Aeropostale, Pac Sun and Children's Place.

After discount clothier Steve & Barry's vacated the "bridge" area of the mall when it liquidated in 2008, it left an deserted 20,000-square-foot space that now is occupied by a Boscov's furniture showroom.

"Vacancy problems are contagious," Mr. Boscov said.

"He understands better than anybody the elements that are impacting his business and retail across the nation," said Robert Durkin, president of the Greater Scranton Chamber of Commerce.

The mall's occupancy problems are not particular to the location, Mr. Doherty said.

"Other retail places have challenges, too," he said. "There's more online shopping. There's more retail development in the (Scranton) neighborhoods."

The mall in recent years turned to nontraditional tenants to fill several second-floor spots, including the Single Tax Office, a branch of the Lackawanna County library system, a tobacco and sundries shop, a children's museum, a tax services company and a seasonal train display that has become permanent.

The food court has three restaurants and four vacancies.

The mall reports that 85 percent of its square footage is occupied. Nevertheless, there are six first-floor retail vacancies and at least three on the second floor, along with the nontraditional occupants. An unoccupied second-floor space is leased by the Junior League of Scranton, according to mall management.

Some of the mall's occupancy problems result from a limp economy and a severe contraction in retail companies following the financial crisis of 2008, Mr. Durkin said.

"I'm not shocked," he said. "We were certainly aware of the challenges facing not just the mall, but retail and other businesses across the country."

Mr. Boscov declined to answer questions about the mall's financial situation, but admitted the property is not profitable.

"It hasn't been for a number of years," he said. "We have been keeping it alive."

In late 2010, former mall manager James Walsh asked City Council to approve a suspension of payments on a $4.3 million federal loan through the Office of Economic and Community Development.

At that time, he said the mall faced more than $60 million in debt and needed the waiver to secure an interest rate reduction on a $37 million mortgage.

Council eventually granted the request and paperwork filed in the county recorder of deeds office indicates a mortgage modification was approved in 2011. It does not include specific terms or the maturity date of the note.

Last month, Mr. Boscov postponed a meeting with City Council on discussion of repayment of a $1.16 million city loan.

The city's proposed 2014 community development block grant spending plan includes $270,000 for repayment of a Section 108 loan to the mall through the U.S. Department of Housing and Urban Development.

Although the mall faces a murky future, Mr. Boscov pulled off a retailing miracle in 2008 when he came out of semiretirement to rescue the company from bankruptcy in a $300 million deal.

"Who better to resolve this than Al Boscov?" Mr. Durkin said. "He is in the best position to determine the future of that property."

Contact the writer: jhaggerty@timesshamrock.com

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